Can a single license of Captivate be used to create training materials that are then to be used by over 1000 users? Does it use Runtime modules or create PDF docs that they can use free readers to view?

No problem; there are a lot of Captivate published assets around that are used by thousands of users;

Yes you can use a single license of Captivate to create training content viewed by thousands.  You publish out to formats that can be viewed in web browsers. E.g SWF/HTM, HTML5 or PDF